Wednesday, April 13, 2011

The government will press ahead with free trade deals with Korea, Japan, China, Malaysia, Indonesia and the Gulf Cooperation Council despite criticism of such deals from the Productivity Commission and a plea they be subjected to independent analysis.

The Commission reported in December there was little evidence to suggest Australia's six existing free trade agreements had produced "substantial commercial benefits,” and found some may have actually cut trade.

It recommended that an independent body assess likely benefits before negotiations begin and also assess the final text before it is signed.

Trade Minister Craig Emerson rejected both recommendations in responding to the report yesterday saying as well as the six negotiations currently under way he would launch negotiations for a free trade agreement with India if it agreed.

The Council of Textile and Fashion Industries said the minister seemed more interested in negotiating new agreements than in fixing problems with the ones Australia has...
From January 1 new rules will allow men’s suits manufactured in New Zealand to come in come in without the payment of duty on the imported cloth used to manufacture them. Australian suits manufactured in Melbourne by the Stafford Group under the Anthony Squires label will continue to have to pay the duty.

“We have written to the prime minister, Mr Emerson and industry minister Kim Carr and received nothing more than an acknowledgement,” said Jo Kellock, chief executive of the Council of Textile and Fashion Industries of Australia. “We don’t know why they did it, it is as if with only two suit manufacturers left we are too small to matter.”

The new interpretation of the rules governing the New Zealand Australia Free Trade Agreement will mean that New Zealand manufacturers will no longer be required to pay an equivalent duty to Australian manufacturers on their imported cloth when their product arrives on Australian shores. Cloth can make up as much as 60 per cent of the value of a suit.

The Productivity Commission said such complex “rules of origin” could slice as much as 8 per cent of the value of trade in countries with Free Trade Agreements.

Mr Emerson yesterday refereed inquiries about the New Zealand rule change to Mr Carr whose office said pointed to “ support available for clothing manufacturers in Australia to innovate and be more competitive”.

The trade minister rejected suggestions he was negotiating new agreements for the sake of it saying he did not “want to collect ornaments for the national mantelpiece; saying it’s a free trade agreement when it is nothing of the sort”.

He accepted every Productivity Commission recommendation other than those for independent reviews.

The new trade principles approved by cabinet give priority to multilateral rather than country-by-country deals, require non-discrimination among countries in negotiations, transparency and “the seamless execution of trade policy and wider economic reform”.

In addition trade considerations will override foreign policy considerations in negotiating deals and Australia will break down trade barriers without waiting for other countries to move first.

The Business Council and Australian Industry Group broadly welcomed the principles while the Services Roundtable was disappointed the minister had decided not to subject free trade agreements to quantitative analysis.

The Fair Trade and Investment Network welcomed the focus on transparency saying in the past agreements had been ratified in secret by cabinet and only later sent to a parliamentary committee.